INFLUENCE OF EXTERNAL ENVIRONMENT FOR BUSINESS INFLUENCE OF EXTERNAL ENVIRONMENT FOR BUSINESS COMPANY IN TURKEYCOMPANY IN TURKEYPresented by Mithat Eroğlu

Demographic of Turkey

Population: 80,694,485Primary Language: TurkishCurrency: LiraCapital City: Ankara

 

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Demographic: Population Between Turkey and Other Countries 2013

Political Environment

Turkey is strategically positioned at the crossroads of Europe, Asia and the Middle East.As bridge between Europe and Asia, and the protector of the straits between the Black Sea and the Mediterranean, Turkey is often referred as “the most important country in the region".

Social And Cultural Environment

Toleration of different religious beliefs and cultures Combined characteristics of Europe and Asia A warm and friendly Hospitable Turkish culture

Economical Environment

Currencies in a number of emerging economies depreciated by the greatest amount in May-June 2013, particularly in Brazil, India, Indonesia, South Africa and Turkey, at the same time that capital inflows to these economies declined.Turkey is the 18th largest economy in the world.

External Debt

Percentage of GDP

India and Turkey have the highest external debt to-GDP ratio of about 20%.

ECONOMIC OUTLINEECONOMIC OUTLINEA- Macroeconomic Outlook

Growth Forecasts for Country Groups (%)

In 2013, Turkish economy grew by 4%.According to the IMF, Turkish Economy is expected to grow by 2.3% in 2014.

World Turkey Euro Area US Brazil Russia India China

IMF2014 3.6 2.3 1.2 2.8 1.8 1.3 5.4 7.5

2015 3.9 3.1 1.5 3.0 2.7 2.3 6.4 7.3

OECD2014 3.6 3.8 1.0 2.9 2.2 2.3 4.7 8.2

2015 3.9 4.1 1.6 3.4 2.5 2.9 5.7 7.5

WB2014 3.2 2.4 1.1 2.8 2.4 1.1 6.2 7.6

2015 3.4 3.5 1.4 2.9 2.7 1.3 6.6 7.5

Forecasts for Merchandise and Services Trade Growth (%)

According to the IMF estimates, global trade volume of merchandise and services is expected to increase by 4.3% in 2014 and 5.3% in 2015. According to the WTO estimates, global trade volume of merchandise and services is expected to increase by 4.7% in 2014 and 5.3% in 2015.

Exports Imports World Trade

Volume Years Advanced Economies

Emerging Markets

Advanced Economies

Emerging Markets

IMF2014 4.2 5.0 3.5 5.2 4.3

2015 4.8 6.2 4.5 6.3 5.3

WTO2014 3.6 6.4 3.4 6.3 4.7

2015 4.3 6.8 3.9 7.1 5.3

Economic Targets of 2014-2016 Medium Term Program

Medium Term Program which covers 2014-2016 period aims to reduce the current account deficit gradually and increase the growth rate by minimizing the effects of global uncertainty.

2013 2014 2015 2016GDP (Billion $, Current Prices) 820 867 928 996

GDP Per Capita ($) 10,782 11,277 11,927 12,670

Real GDP Growth 4.0 4.0 5.0 5.0

Unemployment Rate (%) 9.7 9.4 9.2 8.9

Tourism Income (Billion $) 32.8 31.0 32.0 34.5

Current Account Balance (Billion $) -65.0 -55.5 -55.0 -55.0

Current Account Balance / GDP (%) -7.9 -6.4 -5.9 -5.5

Government Debt / GDP (%)

Debt/GDP ratio of Turkey was 36.3% in 2013 which was below the level in the Maastricht Criteria (60%). According to recent data (The EU’s data are for 2012); Turkey outperformed 25 EU countries.

Unemployment Rates (%) 2013

Real GDP Growth of Selected Countries/Country Groups (2013)

Turkish Economy expanded by 4% in 2014.

Annual Economic Growth Rates (2007-2013)

Real GDP growth for 2013 realized as 4%.

B- FOREIGN TRADE OUTLOOKB- FOREIGN TRADE OUTLOOK1) Merchandise

Targets in Merchandise Trade

* Actual **Forecast

(Billion $) 2012* 2013* 2014** 2015** 2016**

Exports 152.5 151.9 166.5 184 202.5

Imports 236.5 251.7 262 282 305

Volume of trade 389 403.5 428.5 466 507.5

Balance of trade -84.1 -99.8 -95.5 -98 -102.5

Experts /Imports (%) 64.5 60.3 63.5 65.2 66.4

Turkey's Share in Global Merchandise Exports(%)

Turkey’s share in global merchandise exports was %0.81 in 2013.

Distribution of Foreign Trade in Broad Economic Categories

Export

Import

(Million $) Annual 2012 2013

201272013Değ.%

Periodic (January-Feb)2013 2014

2014 Feb%Share

2013/2014Change %

Investment Goods 13,734 15,601 13.6 2,344 2,358 9.2 0.6

Intermediate Goods 82,656 74,843 -9.5 12,092 12,923 50.5 6.9

Consumption Goods 55.56 60,764 9.4 9,335 10,201 39.9 9.3

Others 516 662 28.2 98 112 0.4 13.9

Total 96,906 151,870 -0.4 23,868 25,593 100.0 7.2

(Million $) Annual 2012 2013

2012/2013Değ.%

Periodic (January-Feb)2013 2014

2014 Feb% Share

2013/2014Change %

Investment Goods 33,925 36,760 8.4 5,414 5,135 13.7 -5.2

Intermediate Goods 174,930 183,812 5.1 28,483 28,104 74.9 -1.3

Consumption Goods 26,699 30,416 13.9 4,111 4,244 11.3 3.2

Others 990 663 -33.0 189 59 0.2 -68.6

Total 236,544 251,651 6.4 38.197 37,542 100.0 -1.7

Main Trade Partners (Jan-Feb 2014)Main Export Partners (Share,%)

Main Import Partners (Share,%)

Foreign Trade Developments

In January-February period of 2014 compared to same period of 2013, exports increased by 7.2% and imports decreased by 1.7% respectively.

Annual ( Billion $) Periodic ( Billion $)

2012 2013 2013/(JAN-FEB) 2014/(JAN-FEB) Change (%)2013/2014

Export 152.5 151.8 23.9 25.6 7.2

Energy Export 7.7 6.7 1.1 1.0 -10.4

Gold Export 13.3 3.3 1.0 1.0 -0.8

Import 236.5 251.7 38.2 37.5 -1.7

Energy Import 60.1 55.9 9.1 9.4 3.5

Gold Import 7.6 15.1 1.7 0.6 -65.8

Foreign Trade Volume 389.0 403.5 62.1 63.1 1.7

Foreign Trade Balance -84.1 -99.8 -14.3 -11.9 -16.6

Balance exd. Energy -31.7 -50.7 -6.3 -3.5 -16.6

Export/Import (%) 64.5 60.3 62.5 68.2 *

2012 - 2013 / January-February 2013 - 2014

2) Services

Tourism

Turkey’s share in global exports of services was 0.95% in 2013.

Turkey's Share in Global Services Exports (%)

Tourism Statistics (Quarterly)

Turkey ranks as the 6th in the world and the 4th in Europe among the most favourite tourism destinations.Turkey’s income per tourist increased by 3.6% in 2013 compared to 2012.

C- INVESTMENTS, FOREIGN CAPITAL and INCENTIVESC- INVESTMENTS, FOREIGN CAPITAL and INCENTIVES

Investment Climate in Turkey

10 REASONS TO INVEST IN TURKEY

SOUND ECONOMIC PERFORMANCE CENTRAL LOCATION

YOUNG and DYNAMIC POPULATION ENERGY CORRIDOR and TERMİNAL of EUROPE

QUALIFIED AND COMPETITIVE LABOR FORCE

LOW TAX RATES and INCENTIVE FACILITIES

LIBERAL and INNOVATIVE INVESTMENT CLIMATE

CUSTOMS UNION with EU and OPEN ECONOMY

INFRASTRUCTURE DOMESTIC MARKET

The Sectoral Breakdown of Foreign Investments

* January-February

( Million $) 2012 2013 2013* 2014*AGRICULTURE 43 49 3 45INDUSTRIAL SECTORS 5,479 4,813 564 973 Mining and Quarrying 213 251 150 15 Manifacturing 4,342 2,010 187 849 Production and Distribution of Electricity, Gas, 924 2,516 227 109SERVİCES SECTOR 5,237 5,337 983 665

TOTAL 10,759 10,199 1,550 1,683

Breakdown of Investments in Manufacturing Industry (%)